[ssf] fwd: Bolkestein legacy ‘too radical’ for new Commission ]

Fri Feb 4 12:20:31 GMT 2005

The Bolkestein directive would most importantly have structured EU 
services markets so that a company which met domestic regulation in its 
hiome market would have been allowed to offer services in any other 
European market. This would of course have been quite a blow to national 
level regulation, as it would tend to make services available in the 
least regulated way, rather than bringing all services operators up to 
best standards.

European Voice

Vol. 11 No. 4 : 3 February 2005

The EU Services Directive
Bolkestein legacy ‘too radical’ for new Commission

The European Commission’s bid to liberalise the market for services has
stirred up a hornet’s nest of opposition. Its fate now hangs in the
balance. Anna McLauchlin reports

The EU’s new internal market chief Charlie McCreevy says he is committed
to a services directive, but not as all-encompassing as the one proposed
by his predecessor, Frits Bolkestein, champion of the free market.
Yesterday (2 February), the European Commission announced that, working
with the European Parliament, it would revise the proposal to address
fears that have been expressed since it was adopted in January 2004.

But why did ‘the Bolkestein directive’ fail to take off? Those involved
in the directive from the beginning agree that it could have been
clearer. Such a wide- reaching proposal, which rather than taking a
sector-by-sector approach opens up all services, was inevitably going to
be a political ‘biggie’. In an effort to clear up a few of what were
described as the Commission’s misconceptions, it published a series of
‘Frequently Asked Questions’ on its website (now totalling 40
clarifications on the latest October revision). The explanatory notes
detailed the Commission’s position on the most controversial new rules
and a checklist laid out what the Brussels executive called “myths”
surrounding the proposal. Towards the end of 2004 a list of problems
that the services industry was facing in Europe also appeared, together
with “how the directive would solve them”.  But none of it was enough to
allay serious concerns from many quarters. Fears that the directive
would lead to an influx of cheap labour and a decline in social
standards as companies took advantage of workers from poorer member
states continued to abound, despite the Commission’s insistence that
workers would have to comply with employment rules, including minimum
wages, in the country where they work.

Sweden and Germany worried that their non-legislative labour relations
would be undermined by the proposal. Belgian trade unions claimed that
the Czechs would steal their jobs and as late as last month the European
Socialists warned of a “race to the bottom” with service operators
scouring Europe to find the lowest social protection.

National governments began to panic that their healthcare spending would
spiral out of control when they had to foot the bill for EU citizens
crawling across their borders in order to seek routine medical
treatment. The Commission argued that rewarding efficient providers with
more customers was the best way to improve the standard of treatment
across the EU.

On a more fundamental level, lawyers warned that the proposal covered so
much of the EU’s economic and social structure that it might “seriously
reduce” the scope of international private law. Others said that the
‘country of origin’ principle, under which service providers would only
have to adhere to their own country’s legal requirements when working
anywhere in the EU would be impossible to supervise because Europe’s
administrations were incapable of co-operating at such an advanced level.

Some in Bolkestein’s camp have complained that the proposal has been
subject to propaganda and sabotage, particularly on the issue of
healthcare. Some say that the demonstrations against the directive seen
last summer were simply a convenient rallying point for some European
Parliament election campaigns. Some observers have seen it as
significant that McCreevy’s current chef de cabinet, Martin Power, set
up a cross-border healthcare group when working for the then health
commissioner David Byrne, which effectively scared governments off the
idea of opening up healthcare markets. But as a former finance minister,
McCreevy is understandably sensitive to anything that could affect
national budgets. And given such deep misgivings across the board, it is
perhaps understandable that he might choose to start again with the
directive rather than try to battle with the Bolkestein legacy.

annamclauchlin at economist.com

----------------------------------------

European Voice

Vol. 11 No. 4 : 3 February 2005

The EU Services Directive

McCreevy: we are determined to consider all options

The European Commission will look at all possible options when
considering changes to be made to the services directive, EU Internal
Market Commissioner Charlie McCreevy has told European Voice.

McCreevy would not be drawn on the action he might take but did not rule
out a rewrite or even a withdrawal of the entire proposal. “All options
are open,” he insisted.

The commissioner, who took over the internal market and services
portfolio at the end of November, said that he was in the process of
consulting with various parties, including MEPs, national governments,
trade unions and lawyers and would make decisions based on his findings.

“I’m aware that people have genuine concerns about this and I’ve been a
politician for long enough to know that when people have concerns you
have to respond to it,” he said.

He said that the ‘horizontal’ approach of the directive – generally
covering the service industry rather than drawing up rules for
individual sectors – might have to be reconsidered.

“The previous Commission came up with this idea of this overarching
services directive but it is obvious to me that there are an awful lot
of difficulties about some of the approaches or what it would mean in
certain areas,” he said. Concerns expressed by legal bodies that the
directive could reduce the scope of international law will also be taken
up, McCreevy added.

And he said that he would be sympathetic to the concerns of national
treasuries. “As a finance minister I would certainly understand the
concerns of finance ministers because all finance ministers worry about
anything to do with money.”

National governments fear that the services directive in its current
form could force them to pay for anyone undergoing routine medical
treatment on their territory, as patients would be able to get their
medical charges reimbursed at the same level as they would at home.

But the commissioner insisted that he was “committed” to producing
legislation on the services industry during his five-year term. “The one
thing you have to accept is that you don’t have the option of standing
still in Europe in terms of economic activity,” he warned. “Concerning
the services directive, it is obvious to everybody that something should
be done in the services area to make sure you unleash the economic
potential that is there.” The potential benefits of opening up the
services industry had, he said, been underplayed during the discussions
over the current proposal.

“We know that 70% of economic activity in Europe is done in services,”
he said. “So you don’t have to have a degree in economics to know that
if you can open up the services market you’re going to have an impact on
economic activity and we need increased economic activity in the EU.”

McCreevy also pointed out that his main goal would be to “achieve
something rather than have endless debates about what should be done”.
“My job is to make sure the European economy can do things that it can’t
do now.”

And he said he would listen to all the EU players when making the
changes. “Remember,” he added “it is a process, the European Parliament
has an equal voice, as has the Council of Ministers.”

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